A logistics cycle refers to planning, implementing, and controlling the efficient, effective flow of goods, services, and related information from the point of origin to the point of consumption to meet customers' requirements. It includes the activities of transportation, warehousing, inventory management, packaging, and coordination and collaboration with channel partners, suppliers, intermediaries, third-party service providers, and customers.
The components of a logistics cycle are the various activities and processes involved in planning, implementing, and controlling the efficient and effective flow of goods, services, and related information from the point of origin to the point of consumption. Logistics management aims to meet customer requirements while minimizing costs and maximizing efficiency.
8 Components of a Logistics Cycle
1. Procurement:
The logistics cycle encompasses the processes associated with the planning, execution, and supervision of the movement of goods, services, and any relevant information from its origin to its consumption with the main goal of satisfying the needs of the consumers. It encompasses the processes of moving and receiving products, storing them, managing their quantities, and packing them as well as the processes of interacting and working with channel partners, suppliers, intermediaries, third party service providers and consumers.
2. Transportation:
A logistics cycle consists of the different processes and activities with the aim of planning, organizing, executing and controlling the smooth and relevant transition of a product from its place of origin to its place of use. The logistics management seeks to fulfill the needs of the consumers while ensuring that unnecessary expenses are cut down, and that the available resources are used optimally.
3. Warehousing:
This is the first step in the logistics cycle and it includes the process of buying goods and obtaining services from their vendors. This includes the steps of locating and choosing vendors, contract signing and supervision. Procurement also entails the management of the purchasing order cycle, the handling of supplies and writing of bills.
4. Inventory management:
This component includes the actual counting and control of the existing inventory bolstered by the planning and action of inventory restock. It encompasses the planning and management of the inventory holding costs such as storage costs and insurance costs as well as the level of inventory that will be raised so as to cut down costs and boost efficiency.
5. Packaging:
This component includes the actual touches of preparing the product or good to be ready for its movement to the customer. It includes selection and management of packing material, training, supervising packaging of the product by suppliers and intermediaries as well as customers. Packaging also consists of sourcing of the packaging materials and the physical labor needed, and packaging as a process is designed to have the lowest cost.
6. Distribution:
This component involves the planning and execution of the distribution of
goods to customers. It includes the management of distribution channels, such
as wholesalers and retailers, as well as coordinating distribution activities
with suppliers, intermediaries, and customers. The distribution also includes
managing costs, such as transportation and labor, and optimizing distribution
routes to minimize costs and maximize efficiency.
7. Returns management:
This component involves the process of receiving and processing returned
goods. It includes inspecting, repairing, or disposing of returned goods, managing returns, and refurbishing. This also includes the recovery
and reuse of materials and components.
8. Collaboration and communication:
This component involves coordinating and communicating with suppliers, intermediaries, and customers to ensure efficient and effective logistics operations. It includes managing information and data, such as inventory levels and transportation schedules, as well as managing relationships with suppliers, intermediaries, and customers.
Collaboration and communication also include the management of risks and uncertainties, such as supplier disruptions and transportation delays, as well as the management of logistics performance, such as delivery times and customer satisfaction.
What Is the Logistics Cycle and Supply Chain Difference
The logistics cycle and supply chain are closely related, but they refer to
slightly different things.
The logistics cycle refers to planning, implementing, and controlling the
efficient, effective flow of goods, services, and related information from the
point of origin to the point of consumption to meet customers' requirements. It
includes the activities of transportation, warehousing, inventory management,
packaging, and coordination and collaboration with channel partners, suppliers,
intermediaries, third-party service providers, and customers.
On the other hand, the supply chain refers to the network of organizations,
people, activities, information, and resources involved in creating and
delivering a product or service. It includes all aspects of sourcing raw
materials, manufacturing, distribution, and delivery to the end customer. A
supply chain comprises multiple logistics cycles, from procurement of raw
materials through production, distribution, and delivery to the end customer.
In simple terms, logistics is a subset of supply chain management, and it
deals with the movement and storage of goods, while supply chain management
deals with the entire process of creating and delivering a product or service
to the customer.
Conclusion
Logistics is an essential function in any business that involves the movement of goods, services, and information. It is a complex process that requires coordinating and managing many different activities and processes.
The components of a logistics cycle include procurement, transportation, warehousing, inventory management, packaging, distribution, returns management, and collaboration and communication. All these components work together to ensure the efficient and effective flow of goods, services, and related information from the point of origin to the point of consumption.
Proper logistics management can minimize costs and maximize
efficiency while meeting customer requirements. It is important to understand
each component well to run a successful logistics operation.
Written by: Aykut Alan
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